Oklahoma Becomes 40th State With Best Interest Annuity Requirements

Oklahoma has finalized a best interest rule for annuities based on the model created by the National Association of Insurance Commissioners, becoming the 40th state to do so.

The new rule will be formally published in Oklahoma’s state register in August and will go into effect as of Sept. 1, according to the Insured Retirement Institute, which has advocated for states to adopt rules or laws modeled on the NAIC standard.

The NAIC’s model, which was finalized in 2020, offered states a template to create requirements aligning the regulation of annuity sales and recommendations with the federal regulation of securities by the Securities and Exchange Commission’s Regulation Best Interest rule.

The NAIC model states that agents were not allowed to place their own financial interests ahead of clients, but like Reg BI, the rule did not mandate a fiduciary standard.

Shortly after the NAIC finalized its model, Iowa became the first state to create its own rule based on the NAIC’s template. Other states followed suit in the following months and years. So far this year, Tennessee, Illinois, Georgia, Washington, Wyoming, Florida, Oregon and Kansas passed their own rules or laws based on the NAIC best interest standard. 

The IRI was pushing for at least 40 states to adopt rules or laws modeled off the NAIC template in 2023, according to Sarah Wood, the IRI’s director of state policy and regulatory affairs. 

In an interview with WealthManagement.com, Wood said having such a wide swath of states adopting largely uniform compliance measures will help agents operate, as well as aid customers who may move between states.

“When there’s an understanding of what the compliance expectations are going to be and what they need to do to meet the requirements under the law, that’s beneficial for consumers and producers,” she said. “Having that clarity, that consistency, when it comes to compliance is crucial.”

According to Wood, California, Utah and New Hampshire all have proposed rules similar to the NAIC model, and could be finalized before the end of the year.